Lines Tweak Their Fare Structures To Make Up For Revenue Shortfall

Cruise bookings have rebounded since Sept. 11. The reason, according to industry executives, is widespread discounting, calculated by the lines to spur passengers back on board.

When fares for some seven-day sailings dropped to $399, it was as if The Great Cruise Motivator kicked in.

"People overcame their fears," Carnival President Bob Dickinson told colleagues at Seatrade, the annual state-of-the-industry confab in March. "They drove, they walked, they pogo-sticked to get there."

Nevertheless, overall bookings are down, as are most cruise lines' bottom lines. That is in large part due to the deep discounts and the shifting of ships from Europe and the Mediterranean to the Caribbean, where cruises sell for less.

This leaves cruise lines scurrying to make up the shortfall. Some of the ways in which lines bump up their revenues aren't necessarily obvious, but the subtle squeeze can affect your pocketbook.

Luxury line Silversea Cruises, for example, has created a higher-priced deluxe veranda suite category for 2003. The sudden surfacing of a new cabin category isn't on some new ship; rather, it's finessed from an existing category.

On any given Silversea vessel, all veranda-category suites are identical, and currently they are offered at the same rate in the company's brochures. But in the magical calculus of marketing, even identical suites are not identical. Some are aft. Some are fore. The best, according to the line, are amidships. And the rates for those will be raised next year.

"Our new cabin category, the deluxe veranda, is not physically different from Silversea's regular veranda category," concedes cruise line spokesman Brad Ball in an e-mail. "However, some veranda cabins are being reclassified based on their location."

In the pursuit-of-profit environment, if something is perceived to be better by "discriminating guests," as Silversea and other luxury lines refer to their passengers, then it is better. So next year, those identical veranda suites amidships will cost more, similar to the way resort accommodations are priced based on their locations and views.

"Hotel guests have always been accustomed to paying rates depending on the view and location of a room," Ball says. "This holds true to cruise ships. Silversea is really just adapting suite categories to be more in line and competitive with other cruise ships.

"This new category was partially developed as a result of travel agent and guest feedback. Since the majority of cabins on Silversea ships are classified as veranda suites, there was always great demand for veranda suites that were better located. By creating this additional category at a slightly higher cost, we could cater to guests willing to pay a premium for a better-located cabin.

"Of course, there is an additional revenue aspect that will benefit us," Ball admits. "But it really gives guests more control and flexibility."

So how much more will a discriminating Silversea passenger cough up for the new cabin category? The average, says Ball, is 4 percent to 5 percent. "For example, a veranda suite on an eight-day Lisbon-to-Barcelona sailing on Silver Cloud in August was $8,895 per person; as a new deluxe veranda suite, it's $9,295."

Other lines also are tweaking long-standing practices. Carnival Corp., parent company of six cruise lines, is deciding how to better line its coffers. In the same week, two of the company's brands -- Holland America Line and Carnival Cruise Lines -- announced reconfigured policies that can cost you money.

For years it was an open secret that unsold cabins were steeply discounted as departure approached. But the industry increasingly has tried to discourage potential passengers from postponing the booking of a cruise until the last minute in hopes of nabbing a bargain. Lines initiated early booking discounts to assure that you would get a better fare if you book, say, six months or more before sailing. And to soothe the sensibilities of bargain-savvy vacationers, many lines also instituted so-called price guarantees: If the fare drops, you get your already booked cabin at the lower rate, no ifs, ands or buts.

Now here comes a but. Despite many lines' hopes of locking in most bookings early, prices of a number of unsold cabins did drop as the date of a cruise approached. This was particularly true in the post-Sept. 11 climate. And apparently too many folks were taking up cruise lines on their price guarantees.

To mitigate this, Holland America recently reformulated its policy for departures on or after July 1, 2002, and added an inducement to book early. If you find a lower fare for the same sailing subsequent to making your final payment, you can receive the reduced rate without paying penalties if the cruise-only fare is lower than your original fare by at least 10 percent.